From N.C. Sen. Jeff Tarte of Cornelius, in response to Drivers of this bill? Not N.C. drivers (Our View, March 6):
In a recent editorial, the Charlotte Observer claimed that there is a lot to like about the unique way car insurance rates are set in North Carolina. Like most things however, there is a but...
A concern is that the current system supports hidden fees, does not enable good drivers to take advantage of popular discount programs, and allows government to dictate what companies charge for insurance.
North Carolina is the only state in the nation that forces insurance companies to develop rates through a rate bureau. It is a bureaucratic system that adds unnecessary costs and limits the ability of companies to compete on price. In every other state, companies compete in a free market system. I find it strange to have competitors working together to set rates. Is this government-led price collusion?
Some people have suggested that the N.C. Rate Bureau is responsible for keeping North Carolinas car insurance rates low. But consider this, N.Cs commercial auto insurance market does not use a rate bureau to set rates. Are commercial rates significantly higher? No. North Carolina enjoys some of the lowest commercial auto insurance rates in the nation.
I have co-sponsored a bill in the N.C. Senate (SB 154) that dramatically improves the way car insurance companies are regulated. This proposal would preserve the Rate Bureau for those companies that believe it is a good system, but gives other companies the ability to opt out of the Rate Bureau and set their own rates.
Importantly, the insurance commissioner would still continue to have oversight of insurance rates. The commissioner would have to review all rate increases and would maintain the authority to challenge any increase that he considers excessive or discriminatory. Consumer protections stay in place.
Advantages of SB 154 include companies being allowed to offer popular discount programs for good driving. Currently, many of the programs you see advertised on television are not available in our state.
More important, hidden fees that are charged to every driver to help cover the cost of insuring risky drivers would be eliminated. Did you know that this fee by state law cannot be mentioned on your insurance bill? It cost North Carolina residents nearly $900 million over a five-year period, and most drivers never knew that they were being charged.
This hidden fee is only necessary because our state has insurance companies lump good drivers together with high risk drivers through the N.C. Reinsurance Facility. This practice leaves all drivers with the responsibility for insuring risky drivers, while the insurance company makes a guaranteed profit for servicing these accounts. Does your business get a guaranteed profit for taking on risky business?
North Carolina consumers deserve better. We deserve a system that lets good drivers take advantage of discounts and does not force us to pay hidden fees to help insure risky drivers.
This is how everyone else in the country does business not because it is good for insurance companies, but because it is fair to every driver.
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